Bloomberg Reveals $3 Billion Willets Point Plan

After years of fits and starts, the city has settled on a deal to revitalize a portion of Willets Point. It has agreed to terms with two major developers on the $3 billion project. The 62-acre project is expected to generate $3 billion in investment and create 12,000 union construction jobs and 7,100 permanent jobs. It's expected to bring in $310 million in construction tax revenues and $150 million in annual tax revenues.

Because rundown Willets Point is far from ready to attract homebuyers, Related and Sterling will push back the housing component of the plan, a decision that has upset local elected officials. The developers will start by spending up to two years cleaning up a 23-acre swath of Willets that needs extensive remediation—nearly twice the 12-plus acres called for in the city's request for proposals. The developers then plan to build a 200-room hotel just to the east of CitiField along 126th Street, as well as a retail strip and temporary parking lots.

After that, they will add a new component to the project—an approximately 1 million-square-foot retail and entertainment complex on the parking lot just west of CitiField. Tentatively called Willets West, the mall will connect Willets Point and CitiField to Corona, expanding the scope of the redevelopment and creating thousands more jobs.

Once the mall west of CitiField is built, the developers plan to start construction of up to 2,500 housing units, 35% of which would be affordable, and more retail space east of the stadium. In all, the project entails 5 million square feet of new development.

The city negotiated for a clause that would force the developers to pay $35 million if they don't break ground on the housing according to the timetable set by the Bloomberg administration. The city could also replace the developers at that point.

"Unlike any other proposal, it includes everything we were looking for in the first phase, exactly as envisioned and approved by the community and City Council back in 2008," Mayor Michael Bloomberg said at a breakfast sponsored by the Queens Chamber of Commerce. "Does it include everything on everyone's wish list and on the time line we were hoping for? No. But it is a strong proposal that will allow us to completely transform Willets Point into a vibrant community and destination."

The developers did not pay anything for the land, prompting opponents of the project to contend that the city reversed course. They pointed to a 2008 City Council hearing, where under questioning from then-City Councilman Hiram Monserrate, former Deputy Mayor for Economic Development Robert Lieber said the city's "goal would be to get the city taxpayer money back."

The city estimated that the project would generate $3 billion in private investment and create 12,000 union construction jobs and 7,100 permanent jobs. It's expected to bring in $310 million in construction tax revenues and $150 million in annual tax revenues. "The market responded to what is feasible, and this is a clear, achievable path to the vision that the City Council approved," said a spokeswoman for the city's Economic Development Corp.

The new project will need the approval of the City Council, which must approve zoning adjustments pertaining to the temporary parking lots. In order to speed the development process, the project will not go through the city's laborious land-use review process again.

"After all of the controversy, after all of the anxiety and after all of the effort to remove people from their property, for a project that was supposed to be for all kinds of public benefits, all we are left with is a mall—a $3 billion mall that the city is giving as a gift to two developers," said Jake Bono, a property owner and spokesman for Willets Point United. "We fully expect and hope that the City Council will send this newly conceived Willets Point project into the wastebasket, where it properly belongs."

At the breakfast, Mayor Bloomberg said at that the city had acquired more land from property owners in the phase-one area, upping its control to 95%. The city wants to avoid condemning land through eminent domain, but hasn't ruled it out. Five parcels, controlled by four owners, remain in private hands. Officials are in discussions with three of the owners.

 The Related/Sterling plan was the only one of four proposals the city received that didn't seek substantial subsidies, a rezoning or continued city liability at the site. The city's budget for the project hasn't changed—it still has about $400 million earmarked—but some of that money will be moved around to help the developers with remediation and infrastructure. Economic activity from the initial parts of Related/Sterling project will allow the city to put $65 million into its capital budget for 2020 to build Van Wyck Expressway ramps that must accompany the housing.

The selection of the Related/Sterling plan virtually ensures that one of Mr. Bloomberg's signature economic development initiatives will not get off the ground before he leaves office. Assuming approvals are granted, the new plan calls for remediation to begin in 2014.

The challenges of Willets Point have bedeviled officials for decades. In 2007, Mr. Bloomberg appeared to be on his way to a solution, calling the area's future "very bright indeed." But his ambitious plan for 5,500 units of housing, 500,000 square feet of office space, and 1.7 million square feet of retail space, hotels and a convention center was based largely on a real estate boom that abruptly ended. The city then broke the project into phases. The first one finally appears to be on track.

"Willets Point is one of those things that's gone on and on and on," Mr. Bloomberg said. "It may have taken a long time but we are going ahead with a plan that is very innovative, creative, fits the needs, is affordable and we have guarantees this is going to get done on time, on budget, on schedule and make a very big difference in our city."